Rant: The U.S. facing the largest financial collapse ever

[Anonymous]

Tim May writes:
> As everyone should know by now, and probably does, the Social Security 
> scheme in the U.S. is nothing more than a large Ponzi scheme. Payroll 
> taxes, amounting to about 15% of income up to some level (ratcheted 
> upwards every few years), go straight into the General Fund, where the 
> 34%-39% top tax rate funds and all of the other taxes go into.
>
> The General Fund (not its official name...it may not have one) issues 
> the SS Geheimstatssecuritatwelfarefund an "IOU" for the trillions owed 
> by the General Fund to the SS G.
>
> Those IOUs are not even computed as part of the national debt. (!!) Talk 
> about using Enron accounting!

Standard accounting rules are completely inappropriate when looking at
the situation for an entire country over a period of decades.  By this
reasoning, a young family borrowing money to buy a house is making a huge
mistake because it will be in debt to the tune of several years' salary.

What is overlooked in this analysis is that the family, just starting
out in the world, can expect increased income over years to come.  In the
long run, that house will be very affordable based on the expected growth
in income.  But standard accounting principles do not take into account
expected future income.

This shows up most drastically in the case of Social Security, where we
are supposedly $20 trillion in debt.  What about the income which will
be used to pay off that debt?  Those figures are not included.

The fact is, like a young family starting out in the world, we have
every reason to expect our income levels to rise steadily over future
decades, just as they have done in the past.  The world is not a static
place.  Technology and science are improving at an ever-increasing rate.
These translate into productivity improvements, greater national income,
and a higher standard of living.

In fact, with biotech, nanotech, and all the other -techs that are
expected to become feasible within the next few decades, there is every
reason to expect that our income will begin growing at unprecedented
rates.  See some of the predictions at www.kurzweilai.net for examples
of what the future is likely to bring.  (For a good laugh, get Tim May
to repeat his prediction about how nanotech will never go anywhere!
This at a time when you can hardly pick up a business magazine without
finding another article about this new investment opportunity.  Take it as
further evidence of his prognosticative abilities, which are demonstrated
in this thread as well.)

Against this background, it's pointless to worry about a Social Security
debt amounting to $200,000 per household over many decades.  By the
time today's young people are old enough to begin collecting retirement,
two major changes will have occured:

First, the world will be a much wealthier place; standards of living will
likely have more than doubled; technology will have created commonplace
devices that would be literally priceless today.  For such a world,
providing the retirement benefits at the levels specified by today's
laws will be easy and cheap.

But second, and more importantly, health and longevity will likely have
increased substantially as well.  By 2040 it's highly unlikely that a 65
year old man will be facing the kinds of health limitations that a man of
that age has to deal with today.  Four decades of medical research will
allow people who are elderly by today's standards to retain considerable
health and vigor.  There will be no need to retire by 65 if people don't
want to; they can work productively for many more years.

Of course these changes will have almost infinite ramifications as they
affect other parts of society.  The world is likely to be a very different
place in the next decades, as the pace of progress continues to quicken.
It's impossible to predict how it will all work out.  But it seems safe
to say that the world will give people far more choices and opportunities
than we see today.

Those people who do choose to retire at a youthful 65 can be easily
supported by the incredible productivity increases which the working
population enjoys.  In fact, retirement benefits may well be increased
far beyond what seems practical today, as by the standards of our future
wealth, today's comfortable living is seen as the squalor of poverty.
We have seen this trend going on for many decades, and it is only going
to increase in the future.

There are great things ahead, and it's sad to see someone who claims to
have a clear vision of the future get caught up in such petty concerns
as Social Security obligations.  There are serious problems ahead, some
of which were brought up by Bill Joy in his famous article.  But paying
for Social Security isn't one of them.